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Elizabeth Razzi
Washington Post Real Estate blogger and columnist
Friday, September 18, 2009; 1:00 PM

Post Real Estate columnist Elizabeth Razzi discussed the local housing market -- from condos and investment properties to contracts and mortgages on Friday, September 18, at 1 p.m. ET.

Razzi is the author of two consumer-advice books, "The Fearless Home Buyer" (2006) and "The Fearless Home Seller" (2007).

For more on local real estate, visit washingtonpost.com's Real Estate section.

The transcript follows.

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Elizabeth Razzi: Hi, everyone! Glad to gather again for our little chat. From a quick look at the comments posted in advance, it looks like there's a whole lot of frustration with the real estate market. Let's dig in.

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Fairfax, Va.: I had a frank discussion with a Northern Virginia based realtor about a month ago and he told me, quite frankly, that homes in the $250k - $350k range were selling quite briskly, but anything in the $500k and above range was just sitting. He said this was not the upper end, but rather mid-level "move-up" buyers. At what point do these sellers capitulate and lower their prices to compete, thus putting downward pressure on everything else?

Elizabeth Razzi: Well, they'll only lower their prices below $500k when they have to. If they think their home is still worth more than that -- and many homes still are worth more than that-- they're not going to sell for less unless something forces them to. And that something is not going to be nagging from people who say prices are higher than they should be. It's going to be life events--job changes, retirement, hard times, etc.

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Washington, D.C.: I have been waiting now for 6 weeks to hear back on a property on which I placed a contract. It is a short sale. However, an earlier contract had been accepted and then the deal fell through, so I placed a comparable offer. Based on our area, how much longer do you think I should wait before moving forward to find another property? I would really like to take advantage of the first time home buyer credit.

Elizabeth Razzi: If you're intent on taking advantage of that first-time buyer credit, I wouldn't mess around with a short sale. You're completely at the mercy of a bureaucratic lender who may or may not get around to accepting your offer. Look earnestly at other properties, and if you find some candidates, withdraw your short-sale offer and start anew with a seller who's ready to make a deal promptly.

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Frustratedsville, Md.: We are so frustrated! We are first-time homebuyers looking for houses under $250K, and while we have put in several offers, we are constantly being outbid. It's frustrating.

Luckily, we don't really care about the $8K tax credit (in the grand scheme of things, it's not that much money, and the market will probably continue to drop as more foreclosures hit the market to more than make up the difference). I'm torn between hoping for an extension to claim (because at this rate, we won't get it) and hoping they cancel the credit because then maybe we can actually get a house.

Elizabeth Razzi: Searching for something nice in that price range has always been frustrating. Your experience being out bid is the market telling you that real prices are higher than what you're willing to pay. The only options I can see are to wait until you've saved more money or to look in less-expensive communities farther away from the District. I really don't know if the $8k tax credit makes much of a difference for your situation.

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To Rent or sell? That is the question: So just as I had gotten my head around becoming a landlord in D.C., my agent (I'm using an agent to market my property and a management company once it's rented) calls and says, do you want to sell? I've got a lot of people trying to buy before the $8K deadline and you have a great starter home.

What do I do??! (I know you can't answer this question). I don't actually -need- to sell my property, I just didn't want to deal with tenants.

Just wondering if other reluctant landlords have had similar calls from real estate agents.

Elizabeth Razzi: How 'bout it, folks? Are any of you getting unsolicited calls from real estate agents looking for listings? What should Rent or Sell do? Well, if you don't really want to be a landlord, why not let the dollars make the decision for you? If you can get a price high enough to make selling worthwhile, then it seems your decision is clear.

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Washington, DC: Posting early here, but I have an interesting question. After married couples with two incomes, who are the people more likely to buy homes, condos, etc.? Single men or single women? I am also curious as to how many first time buyers in this area get support from family in buying their homes. Not sure if there are any stats on those items, but they seem like interesting story ideas. It seems like the single people in their 20s and 30s who do own look down on those of us who don't even though they usually are just blessed with families who help subsidize their purchases.

Elizabeth Razzi: They are interesting questions. I'm not so sure, though, about young-ish homeowners looking down on renters. Given the market over the last couple of years, they may have been looking on you and been envious of your freedom. Being underwater is no fun.

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Tax Credit: All I hear about these days is health care....has there been any serious talk in Congress about extending the $8000 new homebuyers credit?

Elizabeth Razzi: Sure there is. In fact we reported just the other day that Treasury Secretary Geithner said they're evaluating options and will make a proposal to the president soon. What do you think, chatters? Should it be extended into 2010? Should it be expanded to $15,000, or made to cover all sales, as the real estate lobbyists propose?

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Potomac, Md.: What are some myths you keep hearing about real estate that you would like to knock down once and for all?

Elizabeth Razzi: Now, that's an interesting thought. Let's see.

Myth No. 1: Prices in the Washington area are high because greedy locals insist that they remain high. Market forces make Washington real estate expensive, little else influences prices.

Myth No. 2: It's (always) a good time to buy. That's a highly personal decision and often has little to do with what's going on in the market.

Myth No. 3: People selling For Sale By Owner are a threat to democracy, capitalism and The American Way. Instead they're really just people exerting their private property rights.

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Ex-fan: I didn't see about MaryAnn's worldwide trip until after the chat was over. Did she notice many places offering enticements to Americans to retire there?

Elizabeth Razzi: Okay, I won't take the "ex-fan" thing personally. Maryann wrote about her trip in last Sunday's Travel section. We'll try to get a link for you. She hasn't mentioned anything about retirement incentives to me.

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Washington, D.C.: Off topic, but why wasn't the discussion listed on the Post's main webpage in the Live Now section?

washingtonpost.com: It's been added now!

Elizabeth Razzi: Thanks for the heads-up!

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Rockville, Md.: What's up with Rockville? Half-empty high-rises are everywhere. What were to be condos are now being released as "luxury" rentals. I drive the Pike (Route 355) every day, often early evening, and can count on my fingers the number of units that have lights on or look lived in. New apartment complexes are fighting each other trying to offer the best amenities and up to three months rent to entice new renters. One rental complex offers free margarita happy hours and $250 karaoke contests every Friday (kind of like what condos used to do to entice buyers). Meanwhile, what condo players are left in the market are still advertising "One bedrooms starting in the low 300's?" Ha! You wish!

Elizabeth Razzi: Well, it could be that the folks who can afford to live in luxury rentals are putting in long hours at work--and simply aren't home yet. But, you're right, a lot of buildings that were intended to be condos switched to rentals because of the market. And renters are reaping the benefit.

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Elizabeth Razzi: To the chatter from Bowie...I'm not going to post anything with your name and home address. Believe me, you don't want me to. If you'd like to resubmit a comment without that, be my guest. And to the Bank of America chatter...I'll take a look, but I can't post web addresses here.

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Laurel, Md.: Elizabeth, do you know of any personal finance books that tackle the question of whether one would be better off as a lifelong renter? Just about every well-off senior I know was a homeowner for most of their adult life, whether they ever married or not. It just seems like "living off retirement pension after the mortgage is paid" is an assumed life-phase for everyone.

But are there circumstances, other than "I want to live in Greenwich Village until the day I die" in which lifetime rentership is the more sensible option?

Elizabeth Razzi: I don't know of any such books. And, generally, owning a home (that you can afford along the way!) is a longstanding means toward accumulating wealth slowly. There's an old-fashioned idea of buying a home--and eventually paying it off! If you choose to be a lifelong renter, that's fine, of course. But I would advise you to be very determined about stashing cash in other investments. You need to have some sort of assets in retirement, whether it's a paid-for house, an annuity or an investment portfolio. Ideally, it's a combo of those, plus other options. I have to say I've never met a retiree who regretted buying a home many years earlier.

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Maryland: I've already written my senator asking to either let the 8K expire or make it a true --first time-- credit... no homeownership for say the prior 18 years.

Elizabeth Razzi: Thanks for adding to the debate!

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Washington, D.C.: I'm a renter but I don't find prices for homes for purchase much cheaper than before. Does $8000 really matter that much in a market where median way over average?

Elizabeth Razzi: If you were looking in Prince William County, or parts of Prince George's, Loudoun or Fairfax counties you would find homes cheaper than they were. But in DC, most prices have not fallen as much, especially in the popular neighborhoods.

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Baltimore, Md.: Re Myth #1 on high DC area costs: Many buyers of new homes don't understand how expensive it is to buy and develop land around DC. By contrast, a "name" homebuilder is selling villa homes (really duplexes, but with 3 BR and 2-1/2 baths) 15 minutes north of the MD/PA line for under $170,000. And it's all because of land costs. In Fairfax Co., those houses would be probably $400K.

Elizabeth Razzi: True. And that's why you see some of those super-commuters making the long haul to DC.

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Still a fan: Sorry about the implication of "Ex-fan." I just meant I had been a fan of MaryAnn's chat even before you joined it.

Elizabeth Razzi: aww, thanks. I better now.

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Germantown, Md.: How many property appraisers base any of their appraisals on Zillow or Homegain? It seems to me their sites are very speculative and at the present time Zillow seems very low as compared to similar homes that are now listed for sale in the area. Do realtors use these websites? Thanks.

Elizabeth Razzi: I believe they would be fighting words if you said them to an appraiser. Any appraiser who would take such a slovenly shortcut would deserve to be run out of the business. And I don't think appraisers are doing that at all. Banks want documentation!

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Unsolicited bids: OMG, I thought I was the only one, and assumed it was some kind of scam. But I called the agents sending me letters (with big name RE companies) and they said they have buyers looking in my specific area but there's only one short sale on the market. Now it makes some sense, that they might have a buyer who wants to beat the $8K clock. Not interested in selling as I just bought last year, but kind of good to know that the prices they were talking about were on par or higher than I paid! Am in Reston, in a unique part of the town that is separate and therefore does not pay town association dues, and does not have as onerous bylaws.

Elizabeth Razzi: Well, they may or may not really have a buyer on the line. But it's interesting that they're soliciting listings again.

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Washington, D.C.: Hi Elizabeth - My significant other and I are saving up to buy a larger place (probably in the District) in the next 1-2 years. I own the the place we currently live in and received the $5000 DC first-time homebuyer credit after I bought it in 2007. If we buy our next place together, would he be eligible for all or part of the first-time homebuyer credit (assuming the DC credit is renewed then, of course)? He has never owned a place. Thanks!

Elizabeth Razzi: No, don't think you can. At least not if you and your S.O. are married. If you're not married, the one of you that really has not been a homeowner might try to claim it -- BUT would have to buy the property all by him/herself.

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washingtonpost.com: Around the World in Four Easy Lessons

Elizabeth Razzi: Here's a link to Maryann's travel story.

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For the would-be Lifelong Renter: The thing about renting is that you're still paying something, and if you want to live in a groovy spot like the Village, you're paying a lot.

You aren't guaranteed to make money owning a house (I can vouch for that!), but the same forces that would destroy home value appreciation would REALLY destroy your investment portfolio, and at least with a house you'd have a place to live.

I'm not a realtor (thank Heaven), just a disgusted investor.

Elizabeth Razzi: What's been especially rough about this recession is that it smashed values across the board. Real estate, stocks, bonds--everything got hit. And people who thought they had invested safely by spreading their money around to different types of assets--normally a good strategy--found they weren't safe after all.

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Georgetown, Fla.: I know I'm no longer a Md. resident, but, i think this question applies to all US real estate:

Don't you think the housing market is going to take another big hit when all the adjustible rate mortgages come due for reset soon?

Elizabeth Razzi: Lots of people smarter than I are pondering that same question right now. Keep in mind, though, that many of those people will see their interest rates adjust LOWER, thanks to the low rates we have now. And an unknown number will be able to afford their new payments, regardless of how they adjust.

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Wilmington, N.C.: I'm just beginning to inform myself about the housing market and real estate and its detailed workings. I'm still somewhat baffled at how it is that interest rates are quite reasonable among all this cacophany of tight lending problems? Thank you for taking my question.

Elizabeth Razzi: It's because the government, largely through the actions of the Federal Reserve, are keeping interest rates low. They've been pushing a whole lot of cash into the financial system, to try to get lending going again.

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Washington, D.C.: We own a rental property in Arlington near the East Falls Church Metro stop. We've heard that parts of that area may be converted by the county from residential to commercial. Who do we ask to find out with certainty whether any plans are in the works for this to occur, and whether such plans, if carried out, might include the county purchasing our home? Thank you.

Elizabeth Razzi: The Arlington County planning commission will be your source of wisdom on that. You might start attending their meetings. It wouldn't hurt to get to know your county politicians, either.

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Cold calls: I've been looking (fruitlessly) for a place to buy for several months now, and my realtor recently asked me if I would like him to place any cold calls to homeowners in neighborhoods that I like, asking them to sell.

I have a feeling this is becoming more common every day. I have yet to take him up on his offer, but it's certainly on my radar.

Elizabeth Razzi: That used to happen a lot during the boom. And there's nothing wrong with it, especially if it's on behalf of a real-live buyer like yourself.

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Washington, D.C.: I am about to get an FHA mortgage for my primary residence. I intend to live there for the foreseable future; however, in my profession, it is not uncommon to go on sabbatical out of town. If I did so, and needed to rent out the house, would it be restrictions? I am under the impression that if I live in the house for at least a year and, for some reason, needed to be out of town temporarily, it would be OK. Thanks

Elizabeth Razzi: To get a loan as an owner-occupant you will be asked to sign a document that states that you plan to live there. You're expected to do so for at least one year after closing. Fibbing is actually loan fraud. Investors have tighter restrictions on down-payments and income, plus higher interest rates.

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Well, they may or may not really have a buyer on the line.: Yeah, agents send out letters fishing for sellers all the time. They suggest buyers are looking at your house (or nearby).

Elizabeth Razzi: Sometimes it's actually true.

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Arlington, Va.: I would just like to chime in and give a new perspective to the age-old argument of renting vs. buying.

I have rented for 10 years now, and don't regret a single moment of it. During the housing boom, there was so much pressure to buy that a great social stigma became attached to renters. I can't tell you how often I heard the line, "You're pouring money down the drain!" because I didn't choose to buy.

But there ARE positives to renting, even financially. To wit, I wasn't spending any money on costly home repair or renovation (like a leaky roof or a new back patio). I could move any time I felt like it (or I should say, when my lease was up) and not have to worry about selling where I lived. If I had an appliance that went bad, it was my apartment building's responsibility to fix or replace it (whereas if I was owning, I'd have to pay out of pocket for repair or replacement).

But most of all, I've been very happy in the places I have lived, regardless if it was a rented apartment. And that is what I think everyone is forgetting--if you are happy with where you live, what does it matter if you're renting or owning? I say forget about the social stigma, and just live where you're happiest.

Elizabeth Razzi: Glad you're happy! Peer pressure really is a lousy motive for such a big decision, anyway. Let me point out the flip side, though. I know plenty of renters during the boom who had to move because the landlord decided to convert to condo--or to move back in to the place himself. And, yes, an owner has to foot the bill on repairs. But you get to choose how you spend your money. Should the new fridge be basic builder-grade or deluxe? Owners call that shot.

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Lock it In: The current historically low rates are not going to be around for too much longer, simply because of the amount of borrowed cash the government is spending. It's way worth paying a point or so more right now to avoid paying double-digits in a few years when inflation really kicks in. Ask anybody who was around in 1980 what 20% mortgages are like.

Elizabeth Razzi: I do think it's wise to lock in today's low rates for the long term. Even if there is not inflation to come (and inflation is not a certainty) rates will go up when the government stops trying to drive them down. But is it worth paying points to drive rates lower than they already are, close to 5 percent? Not necessarily. You have to own that home a long time to recoup the expenditure on points. And you should also consider if that cash could have earned more invested elsewhere.

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Washington, D.C.: Heard a radio ad on DC101 for a company that helps you buy foreclosures "for as little as $199 a month"!

It occurs to me that the main effect of a consumer financial protection agency is that it would finally bankrupt radio -- half their ads are payday checking, $199 a month homes, debt consolidation "relief", etc.

How does ANYONE believe this stuff?

Elizabeth Razzi: Debt-consolidation hucksters are the lowest of the low, preying upon people at their most vulnerable point. These guys selling leads on "hot deals" like foreclosures are selling to the greedy/lazy. Real estate investing takes legwork, folks. If you're not willing to put in the sweat, put your money in an index fund or bank account.

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Happy(ish) News: Just a bit of happy news. My husband bought a condo in Cleveland Park in March 2003, at the height of the market - open house on Sunday, bids due on Tuesday, escalation clauses - all of that.

He lived there two years then we've been renting it out for three (we got married.)

We listed it for sale in July. Sold it within 37 days for 4% more than he bought it. We walked away with a check for $20k. I'm ignoring the sunk costs - his down payment, the money we put in over the years, etc. - and focusing on the fact that we walked away with a check. So yay for that.

Elizabeth Razzi: Yay for you! Thanks for sharing some happy news.

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And there's pride of ownership: I grew up in a house my parents still live in, which is 10 mins away from the houses my grandparents still live in which are 15 mins away from the houses my aunts, uncles, cousins etc. live in.

Renting was not for me. It always felt like someone else's place. I couldn't paint, make too much noise etc.

Just different perspectives.

Elizabeth Razzi: Agreed. Thanks.

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never hurts to make an offer: I suggested my friend make an unsolicited offer on the house she was renting. Ended up the heir thought it was a great idea and pal is in her dream home.

Elizabeth Razzi: True. The worst you will do is flatter someone with your interest.

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Sell vs. Rent?: Sell. Sell! Sell!!

There's absolutely no such thing as a guaranteed tenant, and you're never going to get less for the place than you are right now. If you never plan to live there again, get out.

Elizabeth Razzi: Okay, investing is not for you....

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Lock it in, again: Sorry -- I meant it's worth paying a slightly higher percentage rate, not cash points...that way you spread that cost out, paying with cheaper dollars, and you get the ongoing 35% deduction too.

Elizabeth Razzi: um, you're confusing me now....

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Washington, D.C.: On renting vs. buying: The most well-established reason for buying still has value. If you purchase with a fixed rate, 30-year mortgage and plan to stay in the house for some time, you are beating inflation. At 3% inflation a year, say, the dollars you lay out in 15 years are worth 45% less than they were when you bought your home, yet your payment is the same. Landlords do keep raising rent (unless you have one of those amazing rent controlled deals in NY.)

Elizabeth Razzi: thanks for chipping in....

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Loan on owner-occupied units: I couldn't sell my townhouse and I already bought another....bad mistake. So I went ahead and rented it out. So I need to go back to the lender and asked him to modify the loan agreement or reapply as an investor?

Elizabeth Razzi: No, don't mess with your lender. Just keep sending checks each month. What I meant was, if you are taking out a mortgage, and lie about your intention to live there for at least a year, that constitutes mortgage fraud.

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ARM resets: I just looked up the Federal Reserve Board site (H15). If my ARM was re-setting today, my new rate would be 2.88%. (That's TWO-point-eight-eight percent.)

Elizabeth Razzi: People forget that ARMs can go down. However some of those tricky loans people took out a couple of years ago had higher margins--or no caps on the first adjustment. Some may face higher rates than you. It all depends on the specifics of your loan.

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Wheaton, Md.: ciao Elizabeth,

in your last chat you answered a question I asked concerning whether it was a good idea to consider adding an addition to our house. Believe it our not, your answer prompted quite a bit of discussion in our household and we decided to follow your advice not to add on to our small house.

So, we started looking at houses to buy and found one we love in one of our favorite neighborhoods!!!! Yeah, right?

Well, sort of... it is a short sale and our agent is cautioning us that it may take a long time to actually close.

Not being familiar with the short sale process, could you walk through the steps and explain why it takes so long? Or perhaps you have a link to an article that explains the process?

His response to date seems a bit off-putting, and it got us to wondering if one would need a special agent to handle a short sale. He hasn't said he isn't interested in going through the process, but he doesn't seem overly excited about it either.

Thanks for your good advice last time, and I hope you can help us this time too.

thanks!!!! -Wheaton

Elizabeth Razzi: Basically, the issue with short sales is there's little guarantee the lender will agree to the price advertised by the seller. If the price is too low--or if the lender is swamped with other requests--or the lender has a plodding bureaucracy your offer can sit, unanswered indefinitely. Some banks also try to get real estate agents to accept a lower commission, too. If you have time to spare, try getting a short sale. If you don't, broaden your search to regular deals.

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First Time Credit vs. Repeat Buyers: As a repeat buyer, I would argue that we need the credit MORE than first time buyers.

We put money down on our condo and will not get it all back, if any of it. So after saving up once for a down payment, losing it all, and now having the higher mortgage payment than our rent used to be, plus new life expenses (like daycare) it's even harder to save for another down payment.

Elizabeth Razzi: Another side of the issue. Thanks.

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Elizabeth Razzi: There were a ton of good comments I couldn't get to today. I'll tackle one of them in a Chat Plus post on the blog. In tomorrow's Real Estate section, we have a story about neighbors and environmentalists banding together to make installing solar a much easier proposition. And we'll have a word or two about bats--the hanging upside down kind--as well. Thanks, everybody, and I'll see you in two weeks.

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Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.


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